Bill Text: NJ S2544 | 2014-2015 | Regular Session | Introduced
Bill Title: Establishes process for consideration of offers from short sale buyers during residential mortgage foreclosures.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2014-10-27 - Introduced in the Senate, Referred to Senate Commerce Committee [S2544 Detail]
Download: New_Jersey-2014-S2544-Introduced.html
Sponsored by:
Senator RONALD L. RICE
District 28 (Essex)
SYNOPSIS
Establishes process for consideration of offers from short sale buyers during residential mortgage foreclosures.
CURRENT VERSION OF TEXT
As introduced.
An Act concerning foreclosure of residential properties and amending and supplementing P.L.1995, c.244.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. Section 3 of P.L.1995, c.244 (C.2A:50-55) is amended to read as follows:
3. As used in this act:
"Deed in lieu of foreclosure" means a voluntary, knowing and uncoerced conveyance by the residential mortgage debtor to the residential mortgage lender of all claim, interest and estate in the property subject to the mortgage. In order for a conveyance to be voluntary, the debtor shall have received notice of, and been fully apprised of the debtor's rights as specified in section 4 of this act. For purposes of this act, "voluntarily surrendered" has the same meaning as "deed in lieu of foreclosure."
"Immediate family" means the debtor, the debtor's spouse, or the mother, father, sister, brother or child of the debtor or debtor's spouse.
"Non-residential mortgage" means a mortgage, security interest or the like which is not a residential mortgage. If a mortgage document includes separate tracts or properties, those portions of the mortgage document covering the non-residential tracts or properties shall be a non-residential mortgage.
"Obligation" means a promissory note, bond or other similar evidence of a duty to pay.
"Office" means the Office of Foreclosure within the Administrative Office of the Courts.
"Residential mortgage" means a mortgage, security interest or the like, in which the security is a residential property such as a house, real property or condominium, which is occupied, or is to be occupied, by the debtor, who is a natural person, or a member of the debtor's immediate family, as that person's residence. This act shall apply to all residential mortgages wherever made, which have as their security such a residence in the State of New Jersey, provided that the real property which is the subject of the mortgage shall not have more than four dwelling units, one of which shall be, or is planned to be, occupied by the debtor or a member of the debtor's immediate family as the debtor's or member's residence at the time the loan is originated.
"Residential mortgage debtor" or "debtor" means any person shown on the record of the residential mortgage lender as being obligated to pay the obligation secured by the residential mortgage.
"Residential mortgage
lender" or "lender" means any person,
corporation, or other entity which makes or holds a residential mortgage, and
any person, corporation or other entity to which such residential mortgage is
assigned.
"Servicer" means the person, corporation or other entity responsible for servicing a residential mortgage loan, including a residential mortgage lender who makes or holds a loan if the lender also services the loan.
"Servicing" means managing the mortgage loan account on a daily basis, including collecting and crediting periodic loan payments, managing escrow accounts, or enforcing the terms of the mortgage or note.
"Short sale" means the sale of real property in which the lender or servicer agrees to release the lien that is secured by a residential mortgage on the property upon receipt of a lesser amount than is owed on the mortgage.
(cf: P.L.1995, c.244, s.3)
2. (New section) a. A servicer that files and serves, pursuant to the "Fair Foreclosure Act," P.L.1995, c.244 (C.2A:50-53 et al.), a summons and complaint of foreclosure on a residential mortgage loan shall, within 15 days of receiving a written request from a prospective buyer of the property for a short sale consultation, establish a single point of contact and provide the buyer with one or more direct means for communication with the single point of contact.
b. The servicer shall:
(1) through the single point of contact, make reasonable and good faith efforts consistent with industry standards and the provisions of this section to provide a short sale consultation with the buyer and engage in an appropriate short sale transaction;
(2) ensure that the single point of contact shall be responsible for and have sufficient authority to perform all of the following functions with respect to a short sale consultation:
(a) communicate the process by which a buyer may request a short sale and the deadlines for any required submissions of applications or documentation to be considered for the short sale;
(b) coordinate receipt of all applications and documentation associated with a short sale and notify the buyer of any missing items necessary for consideration;
(c) maintain access to sufficient current information and appropriate personnel as necessary to timely, accurately, and adequately inform the buyer on an ongoing basis of the current status of a short sale for which the buyer is being considered; and
(d) maintain access to individuals with the ability and authority to approve short sales, suspend foreclosure proceedings, or dismiss foreclosure complaints, as appropriate; and
(3) through the single point of contact, respond to a good faith offer from a buyer to purchase the property through a short sale within 60 days of the date of the offer. If the servicer decides not to approve a short sale, or fails to respond to the buyer's offer within 60 days, any deposit made by the buyer in connection with the purchase of the property shall be refunded in its entirety and the buyer shall have no further obligation with respect to the sale or other disposition of the property.
c. All efforts to advance any foreclosure proceedings filed by the servicer against the debtor shall be suspended until the servicer's completion of the requirements of subsections a. and b. of this section or for a greater time period as may be agreed upon by the servicer and the debtor.
d. A motion by a servicer seeking a final judgment of foreclosure, pursuant to R.4:64-1 et seq. of the Rules Governing the Courts of the State of New Jersey, in a foreclosure action in which a buyer has requested a short sale consultation in accordance with the provisions of this section, shall not be accepted by the court unless it is accompanied by an affidavit by the servicer stating that the servicer has substantially complied with the provisions of this section.
e. Nothing in this section shall constitute a limitation on the ability of the servicer and debtor to participate in the New Jersey Judiciary's Foreclosure Mediation Program or any other form of mediation or settlement discussion, or enter into an agreement as a result of that mediation or settlement discussion.
3. This act shall take effect on the 60th day following enactment.
STATEMENT
This bill amends and supplements New Jersey's "Fair Foreclosure Act," P.L.1995, c.244 (C.2A:50-53 et al.), to require residential mortgage loan servicers to engage in consultations on short sales with prospective buyers, upon written request, and to respond to short sale offers from buyers within certain time periods.
A short sale is sometimes used as an alternative to proceeding with a mortgage foreclosure against a debtor through a sale to a third-party buyer in which the lender or servicer agrees to release the mortgage lien on the property upon receipt from the buyer of a lesser amount than is owed on the mortgage. While the "Fair Foreclosure Act" currently requires lenders to adhere to certain homeowner protection practices during the foreclosure process, this bill expands homeowner protections as to short sales by placing certain responsibilities on both lenders and servicers, as defined in the bill, since servicers more typically manage mortgage loan accounts and assess short sale offers on behalf of lenders.
The bill requires a servicer who commences a foreclosure action on a residential mortgage loan, within 15 days of receiving a written request from a prospective buyer of the property for a short sale consultation, to establish a single point of contact and provide the buyer with one or more direct means for communication with the single point of contact.
The bill also requires the servicer to: (1) through the single point of contact, make reasonable and good faith efforts, consistent with industry standards, to provide a short sale consultation and engage in an appropriate short sale transaction; (2) ensure that the single point of contact shall be responsible for and have sufficient authority to perform certain functions with respect to a short sale consultation; and (3) through the single point of contact, respond to a good faith offer from a buyer to purchase the property through a short sale within 60 days of the date of the offer. If the servicer decides not to approve a short sale, or fails to respond to the buyer's offer within 60 days, any deposit made by the buyer in connection with the purchase of the property shall be refunded in its entirety and the buyer shall have no further obligation with respect to the sale or other disposition of the property.
In addition, the bill requires that all efforts to advance any foreclosure proceedings filed by the servicer against the debtor shall be suspended: (1) until the servicer's completion of the bill's requirements relating to establishing a single point of contact for communication with the buyer, providing a short sale consultation and engaging in an appropriate short sale transaction, and responding to a good faith offer from a buyer to purchase through a short sale; or (2) for a greater time period as may be agreed upon by the servicer and the debtor.
Finally, the bill provides that a motion by a servicer seeking a final judgment of foreclosure in a foreclosure action in which a buyer has requested a short sale consultation shall not be accepted by the court unless it is accompanied by an affidavit by the servicer stating that the servicer has substantially complied with the provisions of the bill.
